Do Changes in Dividends Signal the Future or the Past

@inproceedings{Benartzi1997DoCI,
  title={Do Changes in Dividends Signal the Future or the Past},
  author={Shlomo Benartzi and Roni Michaely and Richard H. Thaler},
  year={1997}
}
Many dividend theories imply that changes in dividends have information content about the future earnings of the firm. The authors investigate this implication and find only limited support for it. Firms that increase dividends in year 0 have experienced significant earnings increases in years -1 and 0, but show no subsequent unexpected earnings growth. Also, the size of the dividend increase does not predict future earnings. Firms that cut dividends in year 0 have experienced a reduction in… CONTINUE READING

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